Post Tagged with: Startups

In three days we went from relative obscurity to being the punching bag of the entire tech industry. I suppose some might envy me for all the media attention I’ve received for a side project I built in my underwear one night after waiting in line for a burrito, but that sort of attention does not a legitimate business make. Getting covered in CNN has its perks, to be sure, but a business needs customers, and most of all, trust.

Let’s start with customers. Opening a firehose of traffic on ReservationHop, with the sales that followed, showed that there is indeed a validated secondary market for restaurant reservations. Paid restaurant reservations are not only desirable, but the market is heading that way as people awaken to the inefficiencies in the current system. Some restaurants, annoyed by empty tables reserved for no-shows and short-sats, are moving towards ticketing and deposits anyway. Multiple chefs and owners have pointed to OpenTable as more of a problem than a solution. A paid reservation system makes sense as a way to dissuade no-shows, distribute covers throughout the week, and even increase fairness for customers. As Tyler Cowen put it in the New York Times, “Money is ultimately a more egalitarian force than privilege, as everyone’s greenbacks are worth the same.”

The biggest criticism we have received has not been about the principle of selling reservations, but rather the methods we initially employed to hack this project into existence. We appreciate the criticism and honest feedback, which is why today ReservationHop is doing a “soft pivot” to address the same customer demand, and in addition work with the restaurants directly to cut them in on the deal. We believe that restaurants can benefit from selling reservations for a couple tables per weekend. This will not only reduce no-shows and mediate demand for their peak reservations slots in favor of off-peak times, but they will also get paid for filling these tables, instead of the other way around.

It was never our intention to harm the restaurants. In fact, as we promised from the beginning, we called to cancel 15 or so reservations that didn’t get claimed this weekend 4-6 hours in advance, so restaurants would not have to deal with no-shows.

In addition, I spent a lot of time in the last couple days speaking and meeting with restaurant owners personally, offering my apologies for the troubles we may have caused them and discussing how we may work together in the future on the massive opportunity that has presented itself. It has not been lost on many restaurants that with the sort of media coverage ReservationHop is receiving and the hundreds of local customers begging for instant access to their tables, they are not only getting free advertising as the hottest ticket in town, but are given the opportunity to make money filling their best tables at near-zero risk of no-shows. This is of course an opportunity that we need to explore with them over the next couple of weeks.

This also means that ReservationHop will be evolving, as all early-stage startups do, as we experiment to find a product-market fit. We may find that our early assumptions about customers or restaurants are faulty, or there are better services we can offer to the foodies of San Francisco that are more scalable. Or we may find that this entire venture doesn’t really have a large enough addressable market. One of the interesting things about the last couple of days is how our initial in experiment in customer demand was taken to be “what we do,” with little acknowledgement or understanding (at least outside of the lean-startup-model-aware tech community) that rapid iterations on business models are the norm. As far as I can tell, it is rare for early stage startups to have this much press attention this early in the game. One of the challenges for us will be to navigate the extreme press scrutiny while simultaneously experimenting to find a model that works.

As we evolve, we will continue to let customers have exclusive access to the best tables in the city, while making a new promise to restaurants: we hear your concerns, and we want to work with you. As always, if you are in the restaurant business please drop us a line: admin@reservationhop.com.

This morning I put the finishing touches on, and launched, ReservationHop.com, a site where I’m selling reservations I booked up at hot SF restaurants this Fourth of July weekend and beyond.

I built it over the weekend after waiting at Off the Grid for 30 minutes for a burrito from Señor Sisig, and realized that there’s got to be a market for the time people spend waiting for tables at our finest city dining establishments. Turns out I’m not the first person to think it, as there are two startups doing this very thing in New York City (here and here).

It’s a simple site with a simpler backend. I book reservations under assumed names, list them on ReservationHop, and price them according to the cost of the restaurant and how far in advance they need to be booked up. I don’t use OpenTable; I call the restaurants directly. And I have a policy of calling and canceling reservations that don’t get snapped up, because I don’t want to hurt the restaurants (the assumption being that on-demand restaurants with high walk-in traffic won’t have trouble filling those tables).

I anticipated some mild interest when I launched this morning, emailing the 20 or so potential customers I had interviewed at Off the Grid and some friends. I expected maybe having to make somewhat of an effort in order to get people to discover what I’m doing. I never expected a maelstrom of internet hate.

Not all of the responses have been negative, but an overwhelming number of them has been.

I totally understand the frustration people have with SF’s particular brand of “innovation.” And it seems that everywhere you look cherished public resources are being claimed by startups, whether it’s Google laying claim to bus stops or parking apps laying claim to, well parking spaces. I’d half expect someone to come along one day and put picnic blankets down in Dolores park and sell them at $25 apiece.

I also understand that this represents, as one Tweeter put it, “a caricature of SF tech bro shithead.” And as someone who spends a lot of time complaining to my friends about how much of an insular bubble San Francisco has become, what with apps built by the 0.1% for the 0.1%, I completely agree. In fact, I would have much preferred the media raised this much a fuss about Drillbit or The Creative Action Network or any of my other startups over the years.

But there’s something peculiar about SF, in that our media seems to love hating on stuff like this, so I guess I’m not surprised that I got Valleywagged almost immediately, followed by a post from The Next Web. I responded to an interview request from TechCrunch so it’s written up there too.

But let’s talk about the questions/criticisms everyone has. What was I thinking! How dare I sell something that’s free! Is this even legal? Is it ethical? Restaurants are going to hate this!

To be honest, I haven’t spent a lot of time thinking through these questions. I built this site as an experiment in consumer demand for a particular product, and the jury’s still out on whether it will work. But I can tell you what I have thought through.

The initial criticism has been about the fact that restaurant reservations are free, and I shouldn’t be selling them. First off, reservations aren’t free. Restaurant tables are limited, in high demand and people wait a good long time as walk-ins to get them. Reservations take time and planning to make and the restaurant assumes an opportunity cost from booking them. My friend joked that it took me less time to build this site than most people spend hunting for OpenTable reservations in a given year.

What about ethics? We are talking about an asset that most people don’t think about having a value. That doesn’t necessarily mean that it doesn’t have a value, or that people wouldn’t be willing to pay for it. For instance, no one would have thought that taking a cab during rush hour should cost more than a normal ride, until Uber launched surge pricing and we realized that people are willing to pay for it. Clearly, the service of booking a reservation in advance has value to patrons. This is evidenced by the startups doing this right now in New York City.

If someone does pay for it willingly, is it really unethical? The consumer has made a choice, the reservation stands, the restaurant gets a table filled as planned, and I have made money for providing the service. That seems perfectly ethical to me. I am aware that the ethical conundrum is around the “what if” question: If I book a table and no one buys it, the restaurant loses business, doesn’t it? I don’t know if that’s true yet, and I’m also working at a volume so low that it probably won’t matter. I’m canceling the reservations 4 hours before if they don’t get bought, and certainly a restaurant that’s booked weeks in advance won’t have trouble filling a table with their high walk-in traffic, or someone who gets lucky and snaps up the reservation for free on OpenTable.

But more importantly, I think that a paid reservation lets customers get skin in the game, and that means that restaurants might even reduce no-shows if paid reservations become a thing. When Alinea introduced ticketing (pre-paid reservations), they dropped their rate of no-shows by 75%. That’s a pretty good deal in an industry with razor-thin margins. I’m just speculating on whether this might provide value for restaurants; I can’t speak for them and need to parse this out over the next couple days.

So, back to becoming the most hated person in SF. I learned a lot today about how media, culture and technology in this city interact, and I have to say that overall, I think that the people who have sent me violent threats via email and Twitter, while excessive, may have a point. So in the interest of ethics and fairness, I want to talk to restaurants about working with them directly on a better reservation system. I’ve heard that OpenTable is loathed by many restaurants who don’t want to pay to fill tables. There may be a ticketing solution to high-demand restaurants. If you’re a restaurant, please drop me a line.

And if you’re a regular Jane or Joe, and you missed an opportunity to get a reservation at a hot SF restaurant for your first wedding anniversary this weekend, check to see if there are any reservations available for you at ReservationHop.com.

UPDATE: We have made a “soft pivot” to address feedback from the restaurant and tech industries. Read more here.

It was really hard to switch off of Google, and when I finally did it, I didn’t think I would switch back.

In the past, whenever I’ve tried another search engine, I have failed. Searching is such a natural, compulsory thing to do on the internet, that whenever I have navigated to Bing or DuckDuckGo, I find myself staring at a blinking cursor not entirely sure what to search for. The conscious decision to make a search has always interfered with my ability to search naturally.

But the recent revelations about PRISM and the NSA have led to a surge in interest in cutting the chord to big cloud services like Google whose data collection practices are well known. So, following the herd, I decided it was time for me to switch my default search engine. It wasn’t enough to remember to navigate to DuckDuckGo for searches; instead, I had to change my address bar default search engine in Chrome to force me to use the new engine.

Before I knew it, my 50 or so odd searches a day were going through DuckDuckGo instead of Google.

Now, I love that DuckDuckGo doesn’t track searches. In terms of their commitment to privacy and their users, I don’t think there’s a better option. And I love that there’s an alternative for people concerned about their data being collected. But it took me only a week using DuckDuckGo to appreciate the little things that Google does that still make it a far superior product.

Google is Faster

I didn’t think this would be something I even noticed, but it was apparent immediately that with DuckDuckGo, search results take a fraction of a second longer to show up. It must be no more than 200-300 ms, but it really makes a difference. Every time I am faced with that momentary pause all I can think about is switching over to Google to get faster gratification.

Google Keeps Up with Timely Search Queries

Earlier this week, I searched for “Pride,” expecting to find out more about Pride Weekend in San Francisco. DuckDuckGo seemed to have no understanding of that context, whereas Google’s first results were exactly what I was looking for. It wouldn’t require tracking, just an IP lookup to know where I am and return timely results. Google’s natural integration with their news engine is invaluable to my search experience.

Google Doesn’t Index Sites with Code Errors

This is huge for me. Since I am coding all day long, I need to be able to search for errors that crop up from time to time if I don’t understand them. There was one PHP error this morning that I searched (DuckDuckGo’d?), and the top 20 results were sites that had thrown this error. The sites were destinations like OneFreeCoupon.com–completely irrelevant to my query. Google, as usual, returned very useful StackOverflow results that got me on the right track.

Google Knows When Not to Surface Wikipedia

I love Wikipedia, but sometimes it isn’t the most relevant result. The “Pride” search is a good example, but in general if it isn’t a proper noun, I am more likely to go for a news or video result than Wikipedia. DuckDuckGo seems to surface Wikipedia way too much. I like the way Google does it, especially when they float the Wikipedia results to the right so I always know where to find the article.

In short, I love that DuckDuckGo is gaining interest, and that Google has competition, and that there are choices for all of us when we use the internet. But I tried, and for the things that matter to me, it seems that Google is just a better experience. I hope DuckDuckGo improves the product, because eventually I would love to switch back. But philosophical alignment isn’t enough to get me to use an inferior product.

This is a layperson guide* for what the guy you meet on the plane to Vegas means when he tells you “I have a startup.”

I’m building a Chrome plugin that lists all the parks in Salt Lake City on top of all Mormon-operated blogs using a proprietary Google search algorithm

I work full time as a product manager/blogger/evangelist/entrepreneur-in-residence/babysitter and I want an excuse to quit my job and/or get fired while saving face and/or something to talk about at my 5-year reunion

I have a tech cofounder who’s a full time engineer at Apple/Yahoo/Etsy and I promised him 5% of my company to do all the work

We’re not incorporated yet but the product is what’s really important

I talked to an investor friend of a friend who really liked the idea

Everyone thinks I work 90 hours a week but I spent a good 80% of my day yesterday on Reddit/Facebook/Chess.com

We are pre-launch but we’ve already had a reporter at TechCrunch promise to write about us: that’s our marketing plan. That and Viral.

Making friends/finding Salt Lake City parks is broken. So we’re fixing it with technology.

I’m friends with lots of other founders and they say there’s a need for what we’re building.

I have no college debt and my parents pay my rent so revenue isn’t really a concern. What we are going for is traction.

Traction will be easy because our product is free. We will even incentivize people to use it with mobile gamification and Reddit Gold

Acquisition will be easy because there are a lot of Salt Lake City mapping companies that would love to have our data

Mormons are our main market and there are 24 million of them

As soon as we Show HN our product we will all quit our jobs and go full time to double down on our traction

Even if everything I think about my “startup” is wrong, there’s millionaire in Korea/Japan/Santa Barbara who will probably invest in us anyway

Recently, I was putting together a project proposal for a client when I stumbled across a fairly common problem. Embarking on a new venture, for any startup, is risky, but for tech startups, perhaps, the risk is hedged by relatively little overhead and a short timeline to development. After all, a new website can be built in a year whereas a new farm…you get the point. In any event, the problem I stumbled across was the tendency for tech entrepreneurs in general to be impulsive–aware of the risks yet addicted to the high of winning to the point where they lose their sense in the process. This psychological tipping point is what is known in poker as “tilt”–an emotional state that impairs rational thinking and turns an otherwise good player into a gambler.

I’ve been playing poker a lot more in the last two years, both as a form of entertainment and as a serious academic study. Poker, in its most common variant, Texas Hold’em, is not a game of blind luck: it is a game of skill, intelligence, strategy, risk and reward. If played correctly–as one in ten players do–money can be made consistently in the long run. Like in any other field, only a few master it enough to be a professional. There is no such thing as a perfect player: the best players in the world play each other frequently and trade losses.

In entrepreneurship, a lot of lessons can be derived from poker, in what to do and what not to do. How is poker like entrepreneurship? First of all there is the nature of the hole cards themselves, and how absolute certainty in any poker hand is impossible. Instead, a player must rely on his experience, instinct, and a degree of measured, calculated risk to win money (ROI) on his buy-in (investment). There are different types of poker players, just like there are different types of entrepreneurs. They are loose (risky) and tight (cautious), short stacked (poor) and deep stacked (rich). An investment in a poker game means a chance of failure and loss, but also promises its own much greater rewards.

Many poker players I have encountered at the tables are commodities traders or entrepreneurs–this is not a coincidence. Indeed, the same type of thinking applies to both types of people: people who are risk takers, gamblers, but also thrill seekers and optimistic–maybe even a bit greedy. These traits make successful people, but they can also cause ruin. That’s why professionals and poker players alike recommend that you don’t depend on entrepreneurship or poker as a primary source of income unless it is already a consistent source of income for a year or more. That way, you are not risking ruin if you fail.

midVentures does not endorse gambling (our lawyer told me to put that in). However, I believe that if played correctly, poker is not gambling, but a game of skill. After all, there would be no such thing as a professional poker player if it weren’t possible to master the game! (Meanwhile, there is no such thing as a professional roulette or slots player.) At the same time, most people who play do not do it correctly, and lose money. They play like gamblers and lose like gamblers.

The number one lesson for entrepreneurship from poker is this: Don’t lose your head. The best poker players can be undone by a loss of psychological control. Likewise, don’t let small failures in entrepreneurship drive you off the deep end. Keep your head in the game and don’t be undone by a streak of bad luck. If you are committed to your venture, let your sense and ambition steer you, not your emotions.

As a caveat, if you are interested in taking up poker, do it correctly. Don’t gamble! Take it seriously and don’t spend too much money on learning. Don’t start playing at a casino or a game where a buy-in at a table could be $200 or more. This is money you will inevitably lose at first and you will be more discouraged from learning how to play correctly. Get together a home game where the blinds are $0.05/$0.10 and a buy-in of $5 or $10. This way, you can learn how to play without a great risk of loss. Also, read a poker book or two. Although the best way to learn is by doing, reading and watching poker on TV are two other ways you can get better.

For those who are interested, I am announcing the creation of #ChicagoTechPoker, a weekly poker game for techies only. Only 8 players can play at a time, so if you’re interested, please shoot me an email at brian [at] midventures [dot] com.

Learning how to play poker is a great way to fine-tune an analytical mind, to master a skill set of problem solving and hedging risk, and ultimately a path to success. I hope to see aspiring entrepreneurs at the tables!